Unity Notes Cautious Consumer Spending Ahead

Group Predicts Slight Decline in the GDP

RAPAPORT...
Unity Marketing's proprietary Luxury Consumption Index (LCI) shows ambivalence on the part of the affluent U.S. consumer, households with an average income of $274,900. Present trends from the LCI will likely translate into more ''cautious consumer spending'' into the Christmas 2012 season and the beginning of 2013, according to consulting company. Therefore, retailers and marketers are advised to be reserved in their expectations of consumer spending for the next two quarters. Customers with means will still indulge, but they are very particular about where they invest their spending. Quality over quantity is what they demand, according to luxury marketing expert and Unity Marketing's president, Pam Danziger.

''Unity Marketing continues to track uncertainty among affluent consumers when it comes to their feelings of confidence in their personal financial status and how that translates into spending on luxury or high-end purchases,'' Danziger said. ''Luxury consumers are more positive about the country overall and their personal financial prospects over the next 12 months. Yet they are reluctant to commit to significantly increased levels of spending on luxury over the next 12 months. Further, they are conflicted about their short term financial situation, with 55 percent of those surveyed saying they think their financial status over the next three months will remain the same, neither rising nor falling.''

Unity Marketing's economist, Tom Bodenberg, added that based upon the LCI, which taps the top 20 percent of earners who together account for more than 40 percent of all U.S. consumer spending, he anticipates a slight drop in the country's gross domestic product (GDP).

''We expect to see a decline of about 3/100ths of one percent. The latest LCI, though it posted a small rise, wasn't as strong as it should have been,'' Bodenberg said. ''It reflects a wariness in the economy. Were the economy stronger fundamentally, the rise in the LCI would have been greater. But since it wasn't, the LCI is indicative of an economy which is stationary at best.''